The underlying strength of the market, according to Bank of America, would help initial public offerings (IPOs) in India recapture their recent momentum as early as in the first quarter of 2023. Debasish Purohit believes that IPOs have paused, but it will likely be three to six months before they resume.
The co-head of Bank of America’s India investment banking division said in an interview with Bloomberg Television on September 21 that some IPO activity in 2021 gave way to sales of secondary shares, which are quicker and provide holders an opportunity to monetize their positions.
According to him, India’s equities capital market activity is around 40% in 2022, outpacing the decline of 70% in Asia. Purohit anticipates that consolidation in consumer-facing sectors like financial services and consumer internet-based businesses will help India’s mergers and acquisitions activity to remain robust.
“A large part of India’s M&A dealmaking activity will be inbound because there are sectors in India who are net capital importers,” said Purohit.
According to Purohit, the majority of inbound acquisitions will be in the energy transition, infrastructure, food and beverage, and healthcare sectors, particularly as major global pharma companies prefer to diversify away from the China supply chain or invest heavily in India.
Meanwhile, a proposed IPO for Digit Insurance, a business funded by Fairfax Group has been postponed, according to a Securities and Exchange Board of India (SEBI) regulatory document released on September 20. The document on SEBI’s website stated without going into further detail that the IPO had been kept “abeyance” and that some observations had been made.
According to a Reuters’ report in August, Digit Insurance planned to raise $440 million through an IPO for its non-life division. It was reportedly looking for a valuation of $4.5 billion to $5 billion.
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